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What is a Virtual Enterprise?

Osmand Vitez
Osmand Vitez

A virtual enterprise is a cooperative business operation created for short-term purposes. The cooperation typically includes two or more companies that can provide value to the alliance. Without the virtual enterprise in place, each of the involved companies may be unable to increase its value without the partnership. Many purposes exist for forming this business alliance, chief among those entering a new market and establishing products among a new group of consumers. Firms may also establish an infrastructure to help distribute goods in the market.

Most virtual enterprise operations receive support from computer networks. This allows the companies within the partnership to transfer information easily and improve their ability to establish the operations. The collaboration of the companies can also allow them to share technology that the only one side may know about or understand. The enterprise is temporary, so the companies will not have to share all their technology, just the amount necessary to accomplish the tasks at hand.

Man climbing a rope
Man climbing a rope

A few specific purposes of a virtual enterprise include crossing boundaries, creating equality in a market, dispersing products across vast geographic regions, complementing a partner's competencies, and allowing for the transfer of private information. Not all of these characteristics or purposes exist in each virtual enterprise, however; the sole purpose for the enterprise may only include or focus on one item in the list. For example, a company selling widgets may be unable to reach its entire geographic region. Partnering with another company can help the company accomplish this goal.

As the business world has transformed into the information age, the value of a virtual enterprise has increased. Internet businesses can make copious amounts of money in an absent business environment. A virtual enterprise can help the company to establish its operations, and in some cases, this may even result in a long-term enterprise. For example, a company may decide to use a fulfillment service, which handles the gathering of orders and shipping of products to customers. This allows the Internet to focus on selling goods rather than other ancillary tasks.

Once an enterprise fulfills its purpose, each company in the group will typically vote for the dissolution of the partnership. This will end operations, and each company will return to its normal operations. The information gathered or tasks completed may help each company continue new projects, but they will do so on their own. Legal agreements may prevent each company from attempting to encroach on the other's market share.

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